Uncovering Extra Profits
You’re not in this business for the cool hours and great working conditions. You need to make a profit.
Snow removal is an important service that is often required to retain annual contracts. Many customers prefer to deal with one service provider for all their grounds maintenance needs—including snow removal. It maintains consistency and is less work for your client; however, snow removal is more than just plowing lots, and like any other business, it is competitive. Efficiency, equipment and employees are the keys to a successful operation. In order to make snow plowing pay, you need to consider the following points.
- Hire good employees. You must have quality people in your organization. They are essential to consistent, quality service and client retention. Train them to use the equipment and compensate them at a professional level. Also, find people who are dedicated. Snow removal requires working in some of the most adverse conditions. Mother Nature does not recognize holidays or the time of the day. Be it Christmas Day of New Year’s Eve, if it snows, it is time to plow.
- Prepare your equipment. Keep your equipment maintained and operating reliably. Before snow season begins, check your equipment and gather it in an accessible place. If you remove your plow during the season, be ready to reattach it quickly if unexpected snowfall begins.
- Communication with clients. You need to talk with your clients before and during the season to determine what their needs are. If it snows on a holiday, some commercial clients, such as banks, may not need immediate attention. This gives you the opportunity to prioritize jobs and allocate resources accordingly.
Also, discuss with your clients what their expectations are vs. what you can do. Be sure to explain that lots may be full of cars during snowfalls. Let them know ahead of time that you will not be able to manicure a lot in these conditions, so clearing the driving lanes may be the only option. Tell them that you will be back after hours when the cars are gone and clean up the rest. This way, their expectations can be more realistic.
Also, determine the maximum number of inches of snow your clients can tolerate before you need to start plowing. Some clients can tolerate several inches before they require removal. This gives you leverage to work on other clients’ properties. However, some clients may have a “no-accumulation” policy that needs constant maintenance.
Efficiency is critical
- Equipment. You need to thoroughly analyze each job to determine what type of equipment will be the most suitable. For example, if you are plowing large parking lots and streets, a vehicle with a snow blade will have plenty of room to operate efficiently. When sizing-up smaller driveways, parking lots and commercial properties, snow blowers may be more appropriate. In areas such as housing units with short driveways, side walks, front entryways, mailbox areas and small parking areas, it is more productive for you to use snow blowers. Walk-behinds and units mounted to a vehicle with a short wheel base are available.
Always have extra equipment available. Unfortunately, snow removal and icy conditions take a toll on equipment. Breakdowns will occur and you must have equipment to fall back on. Keep a ready supply of easily replaced parts on hand. You can quickly replace a lost bolt or belt if you have it with you. However, if you have to leave the site or go find an open parts store at 3 a.m., you will be losing opportunity.
As with all equipment decisions, you must asses your current and projected needs. You need to assess the size of your jobs to determine the size and range of your equipment needs. You can put a plow on most vehicles or equipment, but a crewcab, long-bed pickup truck will not efficiently get you into tight areas. The plow-length you choose is also important. Long plows are more efficient in large lots, whereas shorter plows are more maneuverable in tight areas. If you are removing snow on sidewalks and entryways snowblowers are more effective than shovels. However, there will always be a need for shovels.
- Maintenance. Implement an ongoing maintenance schedule. Check your equipment every couple of hours. Inspect all lights and moving parts. Inspect the hydraulic pump, fittings, actuators and hoses for leaks or damage. Check hydraulic fluid levels and change fluids on a regular basis. Inspect the hook-up mechanism and points of attachment to the vehicle. Look for any obvious damage that will impair your ability to do a quality job. If you can switch equipment soon enough, potential damages can be minimized and you can fix them later.
- Communication with employees. If your company is operating multiple plows and drivers, communication is absolutely necessary. You must keep track of where your equipment is so that you can delegate work efficiently. It is critical that you also know what your current work load status is and when clients can expect service. Two-way radios, CB’s or cellular phones are essential pieces of equipment.
What price to charge?
How you price your services can make or break your company’s ability to show a profit. Know the different kinds of conditions that you might expect. Heavy, wet snow takes more effort to push than light snow. Ice also limits what you can deliver to your clients for a given price. Depending on your geographic location, pricing can be based per accumulation of snowfall, by contract or on an hourly basis.
- Price per amount of accumulation or price per inch. When using this method, you must be able to approximate the time required to move “x” amount of snow. This approximation will be determined by your equipment and the limitations of your employees. Understand how many inches you can effectively remove per push. After large snowfalls you may run out places to put the snow. Be aware that after a certain amount of snow has fallen, you may have put forth extra effort and expense to properly complete the job.
- Contractual pricing. Be careful when using this method. It can be risky due to weather fluctuations (too little or too much snow). With weather patterns as unpredictable as they are, second-guessing Mother Nature can be costly. If your client insists on contractual pricing, you should try to get some specifications included that will protect you if snowfall is above average. Explain some of the pricing attributes and make the contract flexible so that you are not committed to something that you have little control of.
- Pricing by the hour. Use this method for new clients and in locations where snowfall is unpredictable. It allows you to charge for the actual production hours and operating expenses that will be required to get the job done. For new jobs that you are having difficulty estimating, this method allows you to accurately determine how long it will take and what equipment is best. However, it also limits your income to an hourly rate.
Keep these points in mind as the snow season continues. Continually analyze jobs and schedules to increase efficiency. New equipment is constantly being added to the arsenal. Some may be the right fit for your operation. Look at your pricing system and determine if the system you are using is best. Make a commitment to squeeze a few more dollars out of jobs by adding more services. Talk with other operators in your area. Find out what works for them. Also, if some small operators are not making consistent money, you may be able to convince them to work for you. It will decrease competition and give you the pricing advantage.
Jim Baugh is president of Cutting Edge Enterprises, Inc. (Bloomington, Ind.).
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